We keep seeing action at a rapid pace and it seems to be escalating, Joshua Lichtenstein, a partner at law firm Ropes & Grays ESG practice, said in an interview on Thursday. It seems like a state which had already taken significant anti-ESG action is going even further.
In all, 19 attorneys general from states largely with GOP-dominated governments, including Arizona, Kentucky and West Virginia, have lashed out at BlackRock for pursuing a climate agenda, at odds, they allege, with generating returns for state pensions. Louisiana and Missouri are among states that have also pulled money from the asset manager.
Using our cash to fund BlackRocks social-engineering project isnt something Florida ever signed up for, Patronis said in the statement. Its got nothing to do with maximizing returns and is the opposite of what an asset manager is paid to do.
BlackRock, which oversees $8 trillion globally, was surprised by Floridas decision given the strong returns it has produced for state taxpayers over the past five years, spokesperson Ed Sweeney said. Neither the CFO nor his staff have raised any performance concerns, he said.
Pressure is building on BlackRock to stem the outflows. An analyst at UBS AG downgraded the asset managers stock rating in October, partly because its early and energetic portrayal of itself as a champion of ESG made the firm a political target.
Chief Executive Officer Larry Fink this week said hes been working to counter criticism from across the political spectrum for BlackRocks support of sustainable investing. Republicans have retaliated against his firms embrace of what theyve described as woke capitalism, while Democrats and environmental activists have targeted BlackRock for investing in fossil-fuel producers.
To help stem the backlash, BlackRock said it had picked Mark McCombe for a new role as vice chairman focusing on telling BlackRocks story to more stakeholders across the US, specifically at the state level, according to an Oct. 3 memo.
Against that backdrop, BlackRock poured record amounts of money into US political campaigns this year. Fink said Wednesday that he has been spending a lot of time in Washington to correct the narrative.
The state treasury will immediately have Floridas custody bank freeze about $1.43 billion worth of long-term securities and remove BlackRock as the manager of approximately $600 million worth of short-term overnight investments, Patronis said Thursday.
Pulling back from BlackRock is the latest step in a broader strategy orchestrated by DeSantis of clashing with corporations for their embrace of ESG values. Back in August, DeSantis passed a resolution calling for state funds to be invested without considering the ideological agenda of the ESG movement.
Patronis took the governors guidance and acted against BlackRock.
The CFO heard the governor loud and clear and accordingly acted to divest state treasury funds from ESG-focused BlackRock, Bryan Griffin, the governors press secretary, said.
The move follows other similar clashes with corporate giants, such as PayPal Holdings Inc. and Walt Disney Co.
DeSantis is seen as a key rival of Donald Trump for the 2024 Republican presidential nomination. The governor won a landslide re-election victory in November promising to battle what he called woke ideology being promoted by Wall Street banks, asset managers and big-tech companies in Florida.
BlackRock still manages about $13 billion for Floridas State Board of Administration, which invests for the Florida Retirement System Pension Plan and more than 25 other state funds, according to an SBA spokeswoman. The Florida Department of Financial Services manages approximately $60 billion in taxpayer money.
This feels like a political determination, not the deliberative determination youd expect a fiduciary to make, Lichtenstein said.
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